Why your business needs a 25-year plan

Today, innovation is occurring at a much faster pace than ever before. Annual, incremental adjustments to your 5-year business plan just won’t cut it. You need to look much further down the road. Here are 5 directional trends to think about.

This article was first published as a LinkedIn article in October 2017. It was reposted in the following Groups: The Harvard Business Review and The Economist Newspaper readers. The message is applicable to businesses and Posts alike.

Why your business needs a 25-year plan

The next 25 years will see unprecedented change – the ubiquity of smart phones and other communication technology; increasing urbanization; the establishment of a middle class in China, the ASEAN sphere and in emerging markets; the maturation of online shopping and the multiplication of robotics and artificial intelligence. How will it impact geo-politics, business and individuals?

As a business decision-maker you want to be aware of innovations and trends that are changing our world. Trend analysis helps you understand the direction of things and allows you to develop a strategic vision about how you might move your business in the right direction.

In his book, Thank You for Being Late, Thomas L. Friedman shows us that we have now entered an age of dizzying accelerated pace of change. Friedman says that the 3 largest forces on the planet – technology, globalization and climate change are all accelerating at once.

The annual, incremental adjustments to the 5-year business plan just won’t cut it anymore. You need to look much further down the road. Here are 5 directional trends to think about.

Ubiquity of communication technology

Inexpensive smartphones, lower-cost Internet and the use of mobile money have already been transformative in developed and emerging markets alike. This digital revolution has provided unparalleled opportunities for entrepreneurs to access markets, information, financial services and viable business opportunities. This has led to a dramatic increase in Micro, Small and Medium Enterprises (MSMEs) that are key for job creation, increased wages and economic growth.

The largest impact will be in emerging markets. Today, even in countries on the UN’s list of Least Developed Countries, people are using Twitter, Skype, Whatsapp, Instagram, Facebook, Gmail and more. Many are also using mobile money to conduct business.

Today one in ten Africans, or 100 million people, use mobile money and more than half of the 282 mobile money services operating worldwide are located in Sub-Saharan Africa. The mobile money sector is evolving beyond international remittances or person-to-person money transfers and airtime top-ups, to the payment of utility bills, salary and benefit dispersal, merchant payments and e-commerce. With increased financial inclusion, there will be a significant reduction in the 2.5 billion unbanked adults and improvement in quality of life.

In 2012, MIT economist Tavneet Suri and William Jack, an economist at Georgetown University co-authored a paper showing that mobile-money services had notable long-term effects on poverty reduction in Kenya, where mobile money service provider M-Pesa is now used by 96% of households. The study concluded that M-Pesa helped Kenyans manage financial uncertainties caused by crop failures, droughts or health issues. Users were able to access a wider network of support and receive payments more quickly during dire financial times. (Photo by MIT News, researchers)

In the next 25 years smaller super-computing, video-communication devices and Internet accessibility will be widespread. This will accelerate real-time access to financial services, education, business information, markets, trade, health care, jobs, entertainment, e-commerce, participation in government and more.

Growth of urbanization

Today 4.1 billion (54%) of the world’s 7.6 billion people live in urban areas. The continuing population shift from rural to urban areas is pervasive worldwide. Urban population is expected to surpass six billion by 2045.

The 2014 revision of the World Urbanization Prospects by UN DESA’s Population Division states that India, China and Nigeria will account for 37% of urban growth between 2014 and 2050. By 2050, India is projected to add 404 million urban dwellers, China 292 million and Nigeria 212 million.

The report notes that in 1990, there were 10 mega-cities with 10 million inhabitants or more. In 2014, there were 28 mega-cities worldwide. By 2030, the world is projected to have 41 mega-cities.

In the next 25 years urban leaders will be challenged in determining financing schemes for the provision of opportunities, services, health care, education, housing, electricity, water, transportation, sanitation, etc. There will be an opportunity for new business models and solutions to these challenges.

Development of new middle classes

The benefits of the digital revolution and the opportunities of higher income in the city will transform the developing world. The major breakthrough will be for people in developing countries who are now living in extreme poverty, less than $2.00 a day.

These financial inclusion efforts together with postal banks will help grow MSMEs, jobs and the middle class.

Smartphones and cheaper video-communication devices will give people access to health care and the ability to buy items that will improve their lives.

Growth of online shopping

The growing prosperity of the Chinese and ASEAN middle class and that of the developing countries will ensure that Alibaba will dominate the worldwide online sales space and be very profitable. Amazon will have surpassed Walmart in worldwide sales.

In the next 25 years, parcels will be delivered within 24 hours or less in China and 48 to 72 hours anywhere in the world.

The future belongs to the Western companies that recognize the trends early and take steps to realign their market understanding, relationships, marketing and strategic efforts to China and the ASEAN sphere.

The combined economic power of China, India, Japan, Indonesia and South Korea will surpass that of Europe and the United States. Their middle class and that of ASEAN countries is the engine of their economic growth that will be a great consumer of “worldwide” goods.

In his speech this month (Oct. 2017) to the 19th Communist Party Congress, China’s supreme leader, Xi Jinping, clearly declared that China now sees itself as a superpower offering a new choice to other countries and a role model for political and economic development.

China has continued on its path to implementing its “One Belt, One Road“, move-forward, world plan. At home, it has been is investing in new AI applications and new energy solutions. China has leapfrogged forward in adopting new technologies. Mobile money is generally accepted.

Over the next 25 years, China’s years of quiet investments and infrastructure building worldwide, focus on education, rise of middle class and tourism, investment in defense, participation in UN peacekeeping missions, diplomacy, development of new trade partners and increased foreign aid in Africa and elsewhere will pay-off as it solidifies its place as the world’s leading economic power and influencer.

Artificial intelligence and robotics

In industrialized countries, artificial intelligence is already embedded in autos, robots, homes and hospitals. The logistic industry is testing autonomous vehicles and drone deliveries. As each new robotic solution is introduced in manufacturing and other areas of labour, an average of 6 jobs will be displaced.

We have all seen the machine-like robots that build our electronics and our vehicles and those being developed by the military industry but perhaps you have not had a “conversation” with social-robot Sophia, created by the Hong Kong-based company Hanson Robotics. She can best be described as Apple’s Siri, Amazon’s Alexa, Microsoft’s Cortana, Facebook’s M and Google’s assistant but on steroids.

Western Governments will be faced with the need to retrain large numbers of people. Some people, of course, will remain unemployable and this will demand creative support solutions. This will be counterbalanced by labour shortages in the innovative industries in IT, robotics, robots, genomics, AI, cyber-security etc.

There will be continued growth in “intermediary” companies that control the interface or platform between the consumer and the worldwide providers of the goods or services. We have already seen the precursors in Alibaba, which carries no products; Uber that owns no cars, Airbnb that owns no rentable real estate and FaceBook, Instagram and Twitter that create no content.

All of this will have significant personal impact on peoples’ sense of purpose and meaning of work. It will have organizational impact regarding the role of people and machines. It will have societal impacts affecting education, training, retraining, minimum wage, base income, income inequality, unemployment, immigration, taxation policy, social security, free time, depression, suicide and crime.

Conclusion

Change is inevitable. Throughout history new technologies and products have eliminated entire industries and occupations. Yet, this simply gave way to the creation of new industries and jobs. Cars replaced buggies; smartphones are replacing landlines.

So how does your business fit into this larger picture?

As John F. Kennedy said, “ Change is the law of life and those who look only to the past or present are certain to miss the future.”